ALJDEC decisions subject to certification as final

20F-H2020053-REL · Department of Real Estate - H/C · 2021-02-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

-54864001

001

-137160-45720000

Erik R. Pierce,

Petitioner,

vs.

Sierra Morado Community Association,

Respondent.

No. 20F-H2020053-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 25, 2021

APPEARANCES: James Frisch, Esq. and Michael Resare, Esq. appeared on behalf of Petitioner Erik R. Pierce via Google Meet. Heather Hampstead, Esq. and Nicholas Nogami, Esq. appeared via Google Meet on behalf of Respondent Sierra Morado Community Association.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

_____________________________________________________________________

FINDINGS OF FACT

1. The Arizona Department of Real Estate (“Department”) is authorized by statute to receive and to decide Petitions for Hearing from members of homeowners’ associations and from homeowners’ associations in Arizona.

2. Respondent Sierra Morado Community Association (“SMCA”) is a homeowners’ association whose members own single-family houses on lots in Tucson, Arizona.

3. Petitioner Erik R. Pierce owns a house in and is a member of SMCA.

4. On March 23, 2020, Petitioner filed a complaint with the Arizona Department of Real Estate (“ADRE”). Petitioner alleged that Respondent was in violation of sections 4.27 and 11.1 of the SMCA CC&R’s.

5. SMCA filed a written answer to the petition, denying that it had violated any of the complaint items in the Petition. The Department referred the petition to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing.

6. A hearing was originally scheduled for June 24, 2020, however the parties had stipulated to continue the matter in hopes of reaching a settlement. After several continuances, the parties requested that a hearing be scheduled.

7. A hearing was held on January 25, 2021.

8. Petitioner submitted 6 exhibits and presented the testimony of four witnesses. Respondent submitted 23 exhibits. Per stipulation of the parties, all exhibits were entered into the record.

9. Mr. Pierce testified that the reason for his complaint was that his neighbors, the Kinstles, installed a hot tub and it was visible from the Pierce’s backyard.

10. Mr. Pierce testified specifically that when there were occupants in the hot tub, they were visible from inside his house and that the occupants in the hot tub could also look directly into the Pierce’s home which violated his right to privacy.

11. Mr. Pierce testified that on September 4, 2019, he submitted a complaint informing SMCA that the hot tub was visible from his property and upon information and belief, the Kinstle’s failed to submit the ARC Form prior to the installation of the hot tub.

12. Mr. Pierce testified that SCMA then informed the Kinstle’s that they installed the hot tub without approval, and directed the Kinstle’s to submit the plans and go through the proper approval process. Mr. Pierce testified that after several rejections from the Board, the Kinstle’s hot tub was approved on February 10, 2020, so long as a pergola and screening were installed.

13. Mr. Pierce testified that on or about March 3, 2020, he received a letter from Jodie Cervantes, a Community Manager with AAM, LLC (the property management company at the time), that the hot tub installation was approved with the pergola screening requirement and that the complaint was closed.

14. Mr. Pierce testified further that to date, the Kinstle’s have failed to install the pergola and screening, and that the Board has failed to enforce this violation of the CC&R’s.

15. Bill Oliver testified that he was the President of SMCA from the fall of 2019 until about April 2020. Mr. Oliver testified that the Board would approve architectural requests retroactively, and did so in this case, with the stipulations of the pergola and screening.

16. Mr. Oliver testified that the Board had a rigorous process of enforcement and would enforce violations if the Board was made aware of the same. However, Mr. Oliver testified that he did not remember if a violation letter was sent to the Kinstle’s after the hot tub was approved.

17. Jodie Cervantes testified next. Ms. Cervantes testified that she was employed by AAM, LLC, and served as the Community Manager for SMCA from 2019 through June 2020.

18. Ms. Cervantes believed that once she became aware of the hot tub issue, the CC&R’s were enforced to ensure that the Kinstle’s complied with the same. She did note that there were some delays in the submission of plans, but ultimately the Kinstle’s hot tub was approved with the pergola and screening requirement.

19. Ms. Cervantes further testified that it was her belief that the matter was now closed and no further warning letters or other enforcement actions could be taken because she believed that the Kinstle’s had six months to comply with the pergola and screening requirements. Ms. Cervantes testified that she believed the six month deadline was in the Design Guidelines, but could not point to the specific language regarding the same.

20. Current SMCA Board President, Martin Douglas testified next. Mr. Douglas testified that he became Board president in April 2020, when Mr. Oliver resigned.

21. Mr. Douglas testified that he had not been to the Kinstle’s property to inspect the hot tub, but was at the Pierce’s residence for another matter. He testified that the hot tub was not visible to him when he was at the Pierce’s.

22. Mr. Douglas stated that while he was unaware if there was a six month grace period to install the pergola and screening, he testified that there were no further enforcement actions due to the ongoing litigation and multiple settlement offers which were being exchanged.

23. Finally, Mr. Douglas testified that upon resolution of this case that the Board will follow through with enforcement actions should the Kinstle’s fail to comply with the pergola and screening requirement.

CONCLUSIONS OF LAW

1. A.R.S. § 32-2199(B) permits an owner or a planned community organization to file a petition with the Department for a hearing concerning violations of planned community documents under the authority Title 33, Chapter 16. Such petitions will be heard before the Office of Administrative Hearings, an independent state agency.

2. Petitioner bears the burden of proof to establish that Respondent violated CC&R Sections 4.27 and 11.1 by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.

3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

4. Article 4, Section 4.27, states:

4.27 Swimming Pools and Spas. No swimming pool shall be constructed or installed on any Lot and no addition, alteration, repair, change or other work which in any way alters a swimming pool shall be made or done without the prior written approval of the Architectural Committee. Any Owner desiring approval of the Architectural Review Committee for the construction, installation, addition, alteration, repair, change or replacement of a swimming pool shall submit to the Architectural Review Committee a written request for approval specifying in detail the nature and extent of the addition, alteration, repair, change or other work which the Owner desires to perform. No above-ground swimming pool may be constructed upon any Lot; provided, however, that what is commonly referred to as a “spa,” “Jacuzzi” or “hot tub” having a functioning water depth of no more than 36 inches and a height above ground of no more than 12 inches may be installed on a Lot if properly screened and set back from the Lot line, if neither it nor its occupants are Visible from Neighboring Property, and with the prior written approval of the Architectural Review Committee as provided in this Section.

5. Further Article 11, Section 11.1 states as follows:

11.1 Enforcement. The Association or any Owner shall have the right to enforce the Project Documents in any manner provided for in the Project Documents or by law or in equity, including, but not limited to, an action to obtain an injunction to compel removal of any Improvements constructed in violation of this Declaration or to otherwise compel compliance with the Project Documents. The failure of the Association or an Owner to take enforcement action with respect to a violation of the Project Documents shall not constitute or be deemed a waiver of the right of the Association or any Owner to enforce the Project Documents in the future. If any lawsuit is filed by the Association or any Owner to enforce the provisions of the Project Documents or in any other manner arising out of the Project Documents or the operations of the Association, the prevailing party in such action shall be entitled to recover from the other party all attorney fees incurred by the prevailing party in the action. In addition to any other rights or remedies available to the Association pursuant to the Project Documents or at law or in equity, the Board shall have the power to levy reasonable monetary penalties against an Owner for a violation of the Project Documents by the Owner, a Lessee of the Owner or by any Resident of the Owner’s Lot, provided the Owner is given notice and opportunity to be heard.

(Emphasis added)

6. As a preliminary matter, Respondent argues that because Petitioner filed a single-issue petition, only one of the sections can be the subject of this dispute. The tribunal believes that because Section 4.27 was essentially resolved by the Board instructing the Kinstle’s erect a pergola and install screening, this issue has been resolved. The heart of the matter is whether SMCA followed Section 11.1 in enforcing their requirements for the pergola and screening against the Kinstle’s.

7. Based upon the evidence provided, the Kinstle’s are in violation of the requirement the ARC Committee imposed on them. To date, no pergola or screening has been installed around the hot tub. However, Section 11.1 only gives the Board a right to enforce, not an absolute obligation. While Petitioner is understandably upset that there has yet to be any follow through on enforcement of the screening requirements, this tribunal finds the testimony of Mr. Douglas more persuasive, namely that the Board has delayed in enforcing because it was trying to foster an agreement with the neighbors. Section 11.1 expressly granted the Board this discretion, and it should not be disturbed. This tribunal takes Mr. Douglas at his word that more strict enforcement will occur at the conclusion of this case, in hopes that both the Kinstle’s and the Petitioner are able to enjoy their properties.

8. Therefore, Petitioner did not establish that Respondent violated CC&R Section 11.1.

order

IT IS ORDERED that Petitioners’ petition is denied.

NOTICE

Pursuant to A.R.S. §32-2199.02(B), this Order is binding on the parties unless a rehearing is granted pursuant to A.R.S. § 32-2199.04. Pursuant to A.R.S. § 41-1092.09, a request for rehearing in this matter must be filed with the Commissioner of the Department of Real Estate within 30 days of the service of this Order upon the parties.

Done this day, February 10, 2021.

/s/ Adam D. Stone

Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

Erik R. Pierce

c/o James C. Frisch, Esq.

King & Frisch, P.C.

6226 E. Pima, Suite 150

Tucson, Arizona 85712-7004

Sierra Morado Community Association

c/o Nicholas C.S. Nogami

Heather M. Hampstead

Carpenter, Hazlewood, Delgado & Bolen, LLP

333 North Wilmot Rd., Suite 180

Tucson, AZ 85711

-54864001

001

-137160-45720000